Historic Changes to Tennessee's Alcoholic Beverage Law

The Tennessee General Assembly has passed historic changes to Tennessee’s alcoholic beverage law. The main headline of the bill is that liquor stores and grocery stores will now be allowed to sell alcoholic beverages and wine on Sunday. Liquor stores will be able to begin to open on Sunday as soon as the bill is signed by the Governor. Grocery stores will be able to begin selling wine on Sunday on January 1, 2019. The law allows liquor stores to be open and grocery stores to sell wine between the hours of 10:00 a.m. and 11:00 p.m.

As part of the legislation, numerous concessions were made to existing retail package stores and legislators with concerns about the bill.

HOLIDAY SALES

Present law prohibits retail package stores from making sales of alcoholic beverages on Christmas, Thanksgiving, Labor Day, New Year’s Day and the Fourth of July. The same prohibition applies to the sale of wine by grocery stores on such holidays.

Effective on the date that this bill becomes a law, retail package stores will be required to be closed on Christmas, Thanksgiving, and Easter. Those holiday provisions do not currently apply to grocery stores.

PRICE DISCOUNTS

This bill requires that retail liquor stores markup spirits 10% from the price that they received on the product from the wholesaler.

Under present law, a retailer is prohibited from offering a discount that results in a price below the cost paid by the retailer to purchase the alcoholic beverages from the wholesaler.

This bill authorizes a retailer to offer a discount on unopened bottles to any customer that results in a price no lower than 10% of the purchase price, if the retail licensee:

(1) Is not in debt to a wholesaler for any credit law violations or refused check; and

(2) Provides a 30-day irrevocable notice of surrender to the commission prior to the termination of the license.

A retail licensee selling a product below cost in accordance with this amendment will be prohibited from subsequently purchasing that product from the wholesaler prior to termination of the license. A retail licensee unable to sell product at a discount below cost may keep the remaining product for personal use.

TRANSFER OF LICENSES

The bill will put in place a 3 year moratorium on the issuance of retail liquor licenses in the state. During that 3 year moratorium, a new retailer will be required to purchase a license from an existing retailer. These provisions do not apply to grocery stores.

This bill creates a temporary window, beginning on the date that this bill becomes a law and ending on July 1, 2021, during which time current licensees could enter into agreements to transfer their license to another person. Any transfer would be subject to the commission’s approval and the same fees and requirements that apply to issuance of a new license under present law would apply to transfers of licenses. During the transfer window, the commission would only be authorized to issue new licenses for jurisdictions that first approve the retail sale of alcoholic spirituous beverages by local option election conducted after April 1, 2018, or to applicants who have filed applications prior to the date that this bill becomes a law.

This amendment authorizes transfers where the license would be used for the same location or, with commission approval, a different location. If a license is transferred for use at a different location, the new location must not be within 1,500 feet of another location engaged in the retail sale of alcoholic spirituous beverages and must be located within the same jurisdiction wherein the transferor premises was located.

On July 1, 2021, the moratorium on liquor licenses will end and applicants may be issued a license without acquiring an existing license.

If you have any questions about these changes, please feel free to give us a call.